#Is the Fed’s October rate hike settled? Expected to hike 25 basis points?
① Since the Fed’s recent first rate hike in three years, several officials have called for further tightening of policy;
② On just Friday alone, three Fed officials released hawkish signals and issued warnings about inflation risks;
③ According to CME’s “FedWatch,” the current probability of a 25-basis-point hike at the Fed’s October meeting is 64.2%.
On Friday, Beth Hammack, president of the Cleveland Fed, said she worries that persistently high inflation could gradually lead the public to view high prices as the norm—and that the Fed must not allow this to happen.
With economic growth staying strong and the job market stable, she expressed concern about inflationary pressure related to demand and noted that capital expenditures will pose inflation pressure for some time.
Hammack warned that if progress in lowering inflation stalls, inflation expectations could shift. She also said that regarding how artificial intelligence will affect inflation, many long-standing questions remain unanswered.
Jeffrey Schmid, president of the Kansas City Fed, said the inflation rate is still above the Fed’s 2% target, and policymakers have not fully resolved the inflation problem.
On Friday, New York Fed president John Williams again emphasized the grim inflation situation and warned that in efforts to bring inflation back to the 2% target, the Fed cannot ignore ongoing supply shocks.
Williams said the labor market is not currently a source of inflation pressure, and added that tariffs themselves typically do not cause persistent inflation. More concerning, he said, is that repeated supply shocks may keep pushing prices higher, making inflation harder to return to the target level.
Last Thursday, Philadelphia Fed president Anna Paulson also said that if the economy evolves as expected, the Fed may need to hike rates further to bring inflation back to the 2% target level.
According to CME’s “FedWatch,” the current probability that the Fed will keep the policy rate unchanged at 3.75%-4.00% in the October meeting is 35.8%, while the probability of a 25-basis-point hike is 64.2%.
Earlier this month, the Fed raised rates, lifting the target range by 25 basis points to between 3.75% and 4%. Officials are expected to hike again before year-end, though market participants expect the size of the Fed’s hikes to exceed this level.
① Since the Fed’s recent first rate hike in three years, several officials have called for further tightening of policy;
② On just Friday alone, three Fed officials released hawkish signals and issued warnings about inflation risks;
③ According to CME’s “FedWatch,” the current probability of a 25-basis-point hike at the Fed’s October meeting is 64.2%.
On Friday, Beth Hammack, president of the Cleveland Fed, said she worries that persistently high inflation could gradually lead the public to view high prices as the norm—and that the Fed must not allow this to happen.
With economic growth staying strong and the job market stable, she expressed concern about inflationary pressure related to demand and noted that capital expenditures will pose inflation pressure for some time.
Hammack warned that if progress in lowering inflation stalls, inflation expectations could shift. She also said that regarding how artificial intelligence will affect inflation, many long-standing questions remain unanswered.
Jeffrey Schmid, president of the Kansas City Fed, said the inflation rate is still above the Fed’s 2% target, and policymakers have not fully resolved the inflation problem.
On Friday, New York Fed president John Williams again emphasized the grim inflation situation and warned that in efforts to bring inflation back to the 2% target, the Fed cannot ignore ongoing supply shocks.
Williams said the labor market is not currently a source of inflation pressure, and added that tariffs themselves typically do not cause persistent inflation. More concerning, he said, is that repeated supply shocks may keep pushing prices higher, making inflation harder to return to the target level.
Last Thursday, Philadelphia Fed president Anna Paulson also said that if the economy evolves as expected, the Fed may need to hike rates further to bring inflation back to the 2% target level.
According to CME’s “FedWatch,” the current probability that the Fed will keep the policy rate unchanged at 3.75%-4.00% in the October meeting is 35.8%, while the probability of a 25-basis-point hike is 64.2%.
Earlier this month, the Fed raised rates, lifting the target range by 25 basis points to between 3.75% and 4%. Officials are expected to hike again before year-end, though market participants expect the size of the Fed’s hikes to exceed this level.
